Tuesday, December 28, 2010
Monday, December 27, 2010
CHINA’S FORAYS IN AFRICA: Is it a blessing or a curse?
China’s venture into Africa has been one of the pivotal events to happen to the continent this past decade. From private sector boardrooms, diplomatic gatherings, academic halls and theatres, cabinet meetings and even to ordinary folks in the local bars and bus stops, the Chinese affair with Africa has attracted heated debates and occupied significant time shares in the continent.
With majority of African governments and private sector favoring ties and greater cooperation with China, in contrast, the western countries and their allies in the international community have been constantly opposed to it. The neutral foreign policy applied by Beijing in dealing with Africans has been their sticking point. The west is especially vocal when China conducts business with ‘rogue’ African states. I have always treated western countries with contempt in anything that Africa does with them. We are never partners with the west, but subordinates…and at one time colonies..and even further back we were a source of slaves. Therefore, it would not be surprising to me if they called us names or regarded Africans as second class citizens in this world.
China has challenged this status quo, and given Africans a better deal (though not great but at least it is better than the bitter pill served from the west). I personally believe this is the reason for their continuous outbursts. I came across this article which has some important facts that could better expose the truth about china’s presence in Africa.
Enjoy….
By Zhang Jun
2010-06-02
I came across an article titled "China's Voice Cannot be Heard in Africa" in the Oriental Morning Post written by a senior journalist Ding Gang and felt shocked by the title. Fortunately, the author started by giving explanations about the title. He said, "When someone travels in Africa, the biggest problem is that he cannot hear China's voice. What I mean by "China's voice" is not the voice of the Chinese people. There are indeed many Chinese in Africa. Whether in a restaurant or a shop, one can often hear familiar Chinese words, even dialects from his hometown. The "China's voice" I refer to here is the voice of the Chinese media. Almost all the reports about China in the African newspapers are the "secondhand ones" from Western media, while there are even fewer reports from China on TV. Even though China is mentioned occasionally, they are mainly images from the Western media."
Ding Gang got the impression from his trip in Africa. What he feels is that in the eyes of African brothers, China is still a place far away. He wrote, "In a hotel at Cairo, when I turned on the TV, all the international news of the local stations is relayed. Of course, you can easily receive programmes from CNN or BBC, which broadcast not only international news, but also African and local news. It gives people the impression that journalists of CNN and BBC are quite active in Africa. Even the local people mainly depend on these two media for local news. Although China's media do have reporter centers in various parts of Africa, the local news reported by them mainly aim at the Chinese there. And the international broadcasting by the Chinese media is mostly China's domestic news and China's own views."
While China's business ties with Africa is growing increasingly closer, The African media is still unfamiliar with China. In the business field, there is no doubt that China's voice in Africa is growing. As a matter of fact, there are more discussions on the issue of "China-in-Africa", whether in the economic or political sense. Of course, it is hard to separate politics with economy when talking about this issue. I once read a paper written by Barry Sautman and Yan Hairong titled "China in Africa –Difficulty of the Global System", which gives a systemic assessment of China's import and export trade and investment in Africa over the recent years and makes a comparison with those of Western countries. We can find a positive image about China not only among the elites, but also among the ordinary people in African countries, which is in sharp contrast with the comments by Western mainstream media about "China-in- Africa".
The elites of the West view China as a rival for Africa's resources and influence, thus distorting the facts about China-in-Africa. Their "China-in-Africa" discourse is much more negative than their "West-in-Africa" discussion. For example, some commentators from the West claim that China's action in Africa is impeding the local development. A New York Times editorial in 2007 was titled "Patron of African Misgovernment", and the patron here refers to China. It states that if African countries put natural resources in hock to the People's Republic of China, China will write them big checks, without questioning about corruption or authoritarianism. The New York Times avers that China is pushing the poorest African workers deeper into poverty by flooding Africa with cheap goods and lending to African states without insisting on standards that Western countries purportedly promote through the Extractive Industries Transparency Initiative (EITI). The New York Times even expresses its "outrage" at a Chinese company's "exploitation" of Zambian miners.
Here I will quote some of the figures and comments from the paper written by Barry Sautman and Yan Hairong to facilitate the readers' understanding about China's business activities and economic influence in Africa.
Import and export
China-Africa trade is rising sharply. Being merely US$3 billion (b) in 1995, it had jumped to $55b in 2006, balanced slightly in Africa's favor. In 2006, China's trade with Africa was merely 3% of its US$1.76 trillion foreign trade but by 2008, China's trade with Africa totaled $107b, now distinctly in Africa's favor. But China's foreign trade had reached $2.56 trillion, making trade with Africa still only 4% of the total. In 2006, China was at the third place, behind the US and France, among Africa's trading partners, while by 2008 China had leapfrogged over France, while still trailing behind the US, with $140b of trade. "China asserts that its trade is responsible for 20% of Africa's economic growth."
Ten percent of Sub-Saharan African exports went to China in 2005, by 2007, the figure was 13.4%. Five oil and mineral exporting countries accounted for 85% of Chinese imports from Africa. In 2004, Africa's exports to China were composed 62% of oil and gas, 17% of ores and metals, and 7% of agricultural raw materials. In 2009, oil, gas and minerals accounted for 86% of such exports. This profile is not unusual: except for South Africa, as the continent's manufacturing is largely confined to textiles and clothing, which China also produces in abundance. As a matter of fact, China and the US have similar structures in terms of their imports from Africa.
In fact, oil accounted for 80% of 2005 US imports from Sub-Saharan Africa; apparel was less than 3%, with minerals most of the remainder. Petroleum products accounted for 92% of the value of goods imported under the US's preferential African Growth & Opportunity Act (AGOA) in 2005. The figure was still 92% in 2008, when 88% of overall US-Africa trade (AGOA and non-AGOA) was in petroleum products. Four African countries alone take up 84% of the total AGOA trade.
About 47% of the oil China consumed in 2006 and 50% in 2008 was imported. China's imports in 2006 were 6.8% of the world oil trade and supplied 12% of all energy China consumed, as coal, hydropower and nuclear power being major sources of Chinese energy consumption. China's 2005 oil imports from Africa provided 4% of China's energy needs. Of the 31% of China's oil imports from Africa, Angola's share was 14%, Sudan's 5%, Congo (B)'s 4%, and Equatorial Guinea's 3%. African oil supplied 14.5% in 2006 and 16% in 2008 of all the oil China consumed, not much different from US imports from Africa of 13.2% of all oil it consumed in 2006, imports that provided 5.2% of US energy needs. China imports oil largely to fuel its production: as 70% of its demand is for industrial uses, while 70% of the US demand is for motor vehicles. In 2009, China's special envoy on African affairs put these figures in perspective when he noted that China receives 8.7% of Africa's oil exports, while the European Union and the US each take 33%. China's Premier also stated that China's investment in Africa's oil and gas industries amounted to one-sixteenth of the total global investment in these industries. Thus China is hardly a dominating force on Africa's oil markets. However basing on such a weak account, the "China-in-Africa discourse" tries to present China as aspiring to be the chief taker of African resources.
In much of Africa, many basic consumer items are expensive imports from developed countries, yet because of the poor infrastructure and perhaps corruption in Africa, which drives production costs high, these are often cheaper than locally-made goods. As Chinese goods are cheaper than both, they thus appeal to the grassroots Africans. The Chinese goods in Madagascar are 2-3 times cheaper than local or imported products. As more Chinese people invest and trade in Africa and compete with each other, the prices are falling. In Kinshasa, the Congo capital, the Chinese merchants first sold shoes at US$12 a pair; but as more Chinese arrived, the price has fallen to $6. In Ghana, as more Chinese bikes are imported, the price fell from $67 to $25 in two years.
If the affordability of the Chinese imports benefits the grassroots African consumers, Chinese imports are taking a significant share of the local imported market (5-14%) only in seven countries, after all. Basic consumer goods do not dominate Chinese exports, which are composed rather of "machinery, electronic equipment and high- and new-tech products." A UK government study found in only one African country, Uganda, that basic consumer goods comprise more than a fifth of the value of all goods imported from China and, moreover, Chinese imports to Africa mainly replace imports from elsewhere and have little impact on the local production. The Chinese government recognizes that some exports are of poor quality but many Chinese goods are sent to Africa by private Chinese or African firms over which the government has little control. Nevertheless Chinese government has "put in place stringent measures to ensure its goods meet all the minimum quality standards for export and designated a department to prevent low quality goods from being exported."
While most Chinese exports to Africa do not displace existing local producers, the Chinese exports to the world at large also have not the "crushing effect" on African exports, as widely charged by the Western countries. The Export Similarity Index, a measurement of the overlapping value of the exported products between various countries, is only 4% between China and the whole of Africa, which involves almost exclusively textiles and clothing (T&C). However, the "China-in-Africa Discussion" features a constant stream of charges against China for "gutting African T&C production".
Direct investment.
Most foreign direct investment (FDI) to Africa comes from Europe, South Africa and the US. These countries together account for more than half of Africa's FDI inflows. China's FDI in Africa was only $49 million in 1990 and $600m in 2003. China's FDI in Africa was $1.6b and in the world as a whole $57b in 2005. From 1979 through 2000, the most recent years for which figures are available, 46% of Chinese FDI in Africa went into manufacturing (15% to textiles alone), 28% to resource extraction, 18% to services (mostly construction) and 7% to agriculture. China has pledged that it would encourage investment in Africa's processing, infrastructure, agriculture, and natural resource industries.
Chinese firms' investment in Africa has increased dramatically. It is estimated that at the end of 2006 investments put in place or pledged to Africa reached $11.7b that went to industries including manufacturing, trade, transportation, and agriculture. The amount of Chinese investment in Africa reached $7.8b in 2008 and $5.5b of which was made in that year alone. It is reported that Chinese direct investment in Africa in the first nine months of 2009 increased by 77% over the the same period of 2008. China will likely soon be a the main source of FDI in Africa, as the Chinese government institutions are offering tax incentives, loans, credits, and ready access to foreign exchange to enterprises that invest directly overseas.
Thus Chinese investment also appears in the "China-in-Africa discussion". Even worse than that about trade, this discussion is narrow-minded and primarily focuses on just one investment by one Chinese SOE against more than 800 major Chinese enterprises in Africa, 100 of them being large SOEs. The Western media have devoted their attention extremely and disproportionately to the Non-Ferrous Company-Africa (NFCA) Chambishi copper mine. The upshot of these reports accuses China as Africa's "super-exploiters".
A comprehensive observation of the Chinese and Western activities in Africa would lead people to question the current global system. Though China's trade and investment do not follow the line of "new liberalism" and thus cannot serve the "mission" of the West, China has still increasingly integrated itself into it. Failing to see that, one is incapable of counter the dual claim that the West is fulfilling its "mission of civilization" in Africa and China is a "moral violator". In fighting against the false charges, China criticizes the West for playing the self-righteous role of Africa's "new mentor" whilst avoids meddling by promoting trade with and invest in Africa for "win-win" outcomes and Africa's development. Many Africans rebut such accusations in the same way too. Compared with that of the main Western states, the popularity of China's presence in Africa goes well beyond the local elites. The 2007 Pew Global Attitudes Survey questioned people in ten African countries asking them to compare the influences of China and the US in their countries. In nine of the ten countries, by margins of 61-91%, the African respondents said the Chinese influence was good. The percentages substantially exceed those for the US. The 2009 Pew Global Attitudes Survey asked the ordinary people in 26 countries about their attitudes towards China. Of the only two Sub-Saharan countries-- Kenya and Nigeria -- 85% and 73% of the respondents expressed good feelings toward China, ranking No. 2 (next only to the Chinese mainland) and No. 4 respectively. One important implication of the Chinese presence in Africa is that the Western countries and firms might need to reflect on their own presence in the continent.
Wednesday, December 22, 2010
Youngest World CEO - Self made billionaire at 24
The truth of the matter is, if this kid did it at 14...then you too can do it..the only difference is how passionate and focused you are. I hope Suhas Gopinath’s story can orient you to the right direction.
HERE IT IS:
When 14-year-old Suhas Gopinath started Globals Inc ten years ago from a cyber cafe in Bangalore, he didn't know that he had become the youngest CEO in the world.
Today, Globals Inc is a multi-million dollar company with offices in the United States, India, Canada, Germany, Italy, the United Kingdom, Spain, Australia, Singapore and the Middle East and has 100 employees in India and 56 abroad.
Among the several honors that have been bestowed upon this young man, the most prestigious is the invitation to be a member of the Board of the ICT Advisory Council of the World Bank.
In 2007, the European Parliament and International Association for Human Values conferred 'Young Achiever Award' on him. He was also invited to address the European Parliament and other business dignitaries assembled in the EU Parliament. He is also recognised as one of the 'Young Global Leaders' for 2008-2009 by the prestigious World Economic Forum.
Suhas is the youngest member ever in the World Economic Forum's history. The other members include the Louisiana governor Bobby Jindal, Hollywood star Leonardo Di Caprio, musician A R Rahman, Prince of Brunei, etc.
In this interview from his office in Bangalore, Suhas Gopinath talks about his decade long journey and his dreams for the future....
On his childhood:
I come from a middle class family. My father worked as a scientist for the Indian Army. I used to study in the Air Force school in Bangalore.
As a child, I was more interested in animals and veterinary science. But when I saw my friends who had home computers talk about it, I had this urge to learn and talk in their wave length. But we didn't have a computer at home. In those days, computers were very expensive and we couldn't afford one. So, what I did was, I located an Internet cafe near my house. With my modest monthly pocket money of Rs 15, I couldn't afford to surf the net every day. I noticed that the shop was closed in the afternoon from 1 PM to 4 PM. So, I offered to open the shop for him after my school hours and take care of the customers. In the bargain, he let me browse the net for free. That was the first business deal of my life and it turned out to be a successful one.
Suhas with Microsoft Co-founder Bill Gates on building websites using open source technology:
Once I got the chance to manage the shop and browse the net, I started building websites. It became my passion in no time. I got hooked to open source technology after I started looking for e-books on how to build websites. They were not available as they were created in propriety sources. So, I started using open source to build websites.
On getting the first contract to build a website:
There is a freelance marketplace on the web where I could register and offer my services to build websites. I registered myself there as a website builder. The first website I had to do was free of cost as I had no references. It was for a company in New York. My first income was $100 when I was 13 for building another website but I didn't have a bank account. So, I told my father that I built a website and got paid for it. I was not excited to get the money because money was not a factor that drew me to it. It was the passion for technology that attracted me. I used to build websites free of cost also. I was only a 9th standard student. After that, I built my own portal and called it Coolhindustan.com. It was focused on NRIs. It was a portal where I wanted to showcase my skills. After that, many companies approached me to be their web designer.
On buying his first computer:
When I was in the 9th standard itself, I had made enough money to buy a computer for myself. At that time, my brother was studying engineering and my father thought he needed a computer. In no time, I also bought one for myself. But we didn't have a net connection at home. My spending hours in the net cafe working on websites did affect my studies. I spent the entire summer vacation after the 9th standard in the cafe.
On rejecting a job offer from the US:
When I was 14, Network Solutions offered me a part-time job in the US and they said they would sponsor my education in the US. I rejected the offer because that was the time I had read a story about Bill Gates and how he started Microsoft. I thought it was more fun to have your own company. Many US companies used to tell me that I didn't even have a moustache and they felt insecure taking my services. They used to connect my ability with my age and academic qualifications. So, I wanted to start my own company and show the world that age and academic qualifications are immaterial. I decided then that when I started a company, I would recruit only youngsters and I would not ask for their academic qualifications and marks cards. I follow that in my company.
On starting his own company at 14:
Soon after my 9th standard summer vacation, I started my own company, Globals Inc. I wanted the name Global or Global Solutions but both were not available, so I named it Globals. I registered my company in the US because in India, you will not be able to start a company unless you are 18. It takes only 15 minutes to start a company in the US. I became the owner and CEO of the company. My friend, an American who was a university student, became a board member. I was very excited because that was what I wanted to do. From that day, I started dreaming of making my company as big as Microsoft.
On doing badly in school:
In my pre-board CBSE exam, I failed in Mathematics. The school headmistress was shocked because that was the first time I had failed in any subject. She called my mother and said she was horrified by my performance. At home, like any typical South Indian mother, my mother made me swear
on her head that I would focus on academics. I told my mother that the world's richest man Bill Gates had not completed his education. Why do you force me then, I asked her. She then said, I am sure his horoscope and yours are not the same! I come from a family where entrepreneurship is considered a sin. My mother was quite upset. She wanted me to do engineering, then an MBA and work in a good company. As per my mother's wishes, I took a four-month sabbatical from my company and studied for my board exam. I passed with a first class. I still feel that you cannot restrict yourself to bookish knowledge. I believe that practical knowledge is more important.
In the first year, the turnover of Globals Inc was Rs 1 Lakh (Rs100,000). The second year, the turnover went up to Rs 5 Lakh (Rs500,000).
On looking at Europe as a market
Till I was 16 or 17, I didn't tell my parents that I had started a company. I kept it a secret because I thought they would object to it. They only knew that I was a freelancer. We used to build websites and also offer online shopping and e commerce solutions. We even gave part time work to a few programmers in the US when we got many projects but we never had any office. When I was 16, I saw that there were enormous business opportunities in Europe as a majority of the Indian IT companies were working for American companies. When I contacted a Spanish company, it rejected my offer saying Indians do not know Spanish. As an entrepreneur, you can't accept rejection, especially when you are young. I hired five student interns from some Spanish universities and told them they would be paid based on their successful sales. They were the people who met the companies and bagged the projects for us. By now, we decided to have a home office in Spain. I replicated the same model in Italy. I contacted some Italian university students.
On going to Germany to talk about entrepreneurship:
The American newspapers were writing a lot about me as the world's youngest CEO at 14 from India, from a middle class background. It was a good story for the BBC also. I never expected to be in the limelight. For me, starting a company was like realising a passion of mine. On seeing these stories, a B-school in Germany invited me to talk to its students on entrepreneurship. I was 17 then. By now, I had completed my 12th standard and had joined Engineering in Bangalore. When I was 18, we set up an office -- the European HQ in Bonn. Then, we moved to Switzerland. Six months back, we started our operations in Vienna as well. That is how we spread our operations from a small Internet cafe to become a multinational company with significant operations in Europe, Middle East, the US, Canada, the UK, Australia etc.
On registering a company in India at 18:
The day I turned 18, I registered our company in India as Globals, opened an office and recruited four people. I opened the office next to the Internet cafe where I started my career. By then, he had closed shop and joined a factory as an employee. Whenever I met him, I used to tell him, 'you made me an entrepreneur but you stopped being one.'
On moving to creating products:
We wanted our company also to be a product development company and our focus was on education, like the software that manages everything about a child while in school starting from admission till he/she leaves school and becomes an alumnus. It is nasty software which students are going to be quite unhappy about! This software was aimed only at the Indian market. I want to be the market leader in ICT in education. Our software is being used in more than 100 schools all over India, Singapore and the Middle East.
We are now in the process of raising funds. Once we do it, we will separate the company into two -- service and product development. I want to concentrate on products as I can't sail on two boats.
On meeting former President of India Abdul Kalam
I met Dr Abdul Kalam when he was the President of India. I was 17 or 18 then. My meeting was scheduled for 15 minutes but we had such an intense conversation that it went on for one-and-a-half hours. I didn't feel that I was talking to the President of India. We talked like two friends. He was sitting in his chair across the table but after some time, he came and sat next to me. He is such a modest person that it was a learning experience for me.
On being on the board of the World Bank:
As per the wishes of my parents, I joined engineering but didn't complete my engineering: like Bill Gates! When I was in my 5th semester, the World Bank invited me to attend their board meeting. I am the only Indian on the board of the World Bank. The objective was to explore how ICT can improve the quality of education in the emerging economies, by bringing in accountability and transparency in their financial deeds. Robert B. Zoellick, the president of the World Bank, decided that they could not have only Americans on the board and needed people from across the world. As they were focusing on education, they wanted young minds to add value to the work.
He preferred a young mind from an emerging country and that was how I got the invitation in 2005. Not even in my wildest dreams did I imagine that I would be on the board of the World Bank. The invitation was the most unforgettable moment in my life. I report directly to Robert B Zoellick!
Some of the others on the board are the CEO of Cisco, the vice president of Microsoft and the CEO of SAP; all Fortune 500 companies and me, the only Indian!
I am helping the World Bank set policies on ICT in university education so that employability can be enhanced. My aim is to reduce the number of unemployed eligible youth in the world. Right now, we are concentrating on Africa. Soon, I want to shift the focus on to India. It has been an amazing experience for me. But I had to discontinue my engineering education at the time I joined the board, as I didn't have enough attendance in college!
On his dreams for his company:
I have always believed that IT is not just technology but a tool that can solve the problems of people.
That is what I want to do in my company. I want my company to be a market leader in software solutions concentrating on education.
When I was younger, I didn't care about money. Now that I am responsible for my employees, I care about what we make. If I am not bothered about money, we cannot scale up our business. When I started my company from a net cafe in Bangalore, I never ever imagined that one day my company would be a multi-million dollar company and I would be on the World Bank board as a member.
What drives me is my passion and it has been an amazing journey so far.
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